Argentina: the safest country in the world

Every time the world enters a new and more dangerous phase, social media gets plagued by listicles indicating the safest countries in the event of World War III. Argentina, of course, is always amongst the top 10 spots given its geographic and geopolitical distance from the main theatres of operation, its vast, unpopulated, and resource-rich territory and the generally high level of welfare enjoyed by the country’s inhabitants. The clickbait-y headline and apparent depth in superficiality of the content makes it Internet gold, immediately going viral on X, Instagram, and TikTok and eventually making its way onto mainstream media as they fish around the internet for web traffic. 

The surprise attack by the United States and Israel that took out Iran’s Supreme Leader Ali Khamenei had been telegraphed for weeks, but was still shocking, thrusting the world into a whirlwind of chaos and uncertainty that was totally unexpected as Argentine President Javier Milei was writing his speech for the formal kickoff of the legislative year that he gave last Sunday, hours after Khamenei had been taken out.

As is generally the case in Argentina, the domestic agenda absorbs the vast majority of the cognitive resources, both of the media and the audience, and the focus was on the aggressive and unhinged attitude Milei exhibited in what is traditionally an institutional event with an adherence to protocol. The top authority of the nation is presenting the State of the Republic in the house of its constituents, also in the presence of the third branch of power. Perfil’s Giselle Leclercq covered the event and counted more than 20 instances of verbal aggression thrown at the president’s political adversaries: “ignorants, thieves, criminals, crooks, losers, fascists, brutes, coup-mongerers, parasites, cavemen, professional liars, beasts, delirious people, corrupt, Mafiosi, murderers, terrorists” – these were just some of the adjectives Milei used to refer to opposition legislators present at the Legislative Assembly. He also noted “they know nothing,” “cannot read,” and “have trouble with basic math.” In some cases, the aggressions were targeted: he called Myriam Bregman a “Trotskyist crybaby brat,” and Juan Grabois an “oligarch in a homeless costume.”

The intelligentsia reeled in horror. The general commentary was that Milei was off the hook, having been overtaken by an uncontrollable bout of anger that made him lose it. That his erratic behaviour and foul speech damaged the institution of the Presidency. He offended many of his circumstantial allies in recent legislative victories, including PRO and the UCR Radicals who helped his libertarian party pass a labour reform. By pissing everyone off he would expel much-needed support from the rest of the non-Kirchnerite political field to retain governability. He props up Cristina Fernández de Kirchner when she’s on her way out, politically speaking.

Yet, the explanation could be much more logical. During last year’s campaign when things started to look seriously uphill, Milei put together an outrageous rock concert at the Movistar Arena that rallied his core and helped recover political momentum. After having been delivered a hefty defeat in provincial elections in Buenos Aires Province at the hands of the leading contender for the title of champion – Governor Axel Kicillof – and trailing substantially in polls, Milei and his libertarians pulled out an epic and unexpected victory that returned the colour to their face, so to speak. It wasn’t just the rock concert, Milei and Economy Minister Luis ‘Toto’ Caputo were rescued by a bailout of sorts from US President Donald Trump and US Treasury Secretary Scott Bessent that included a verbal backstop to support Argentina if and only if Milei won the election. Trump and Bessent took a lot of heat domestically for bailing out their friend Milei – and allowing several hedge fund buddies of Bessent including billionaire Bob Citrone to exit their positions. There’s also talk of local players with close ties to the Treasury Secretary. Then, like now, Milei returned to the basics and relied on the same kind of things that got him elected in the first place.

Ahead of his address to the Legislative Assembly, Milei had sacrificed political centrality for Congressional effectiveness. He remained on the sidelines, using social media but generally hunkered down in the Quinta de Olivos presidential residence, while his political wing weaved alliances. With the economy mired in stagflation, wages and salaries in deep contraction, and inflation on the uptick, Milei has seen his public image slide as discontent has risen. As explained last week, he remains the most popular politician in the country and doesn’t really face any credible threats. But Milei has evolved from political creature to professional and with his Congressional victories on the books is now back on the offensive to regain momentum. The calculated exhibition of unhinged crazy that picked on the Peronist opposition which it grouped under the Kirchnerite banner is classic Milei. It also follows neatly in the footsteps of his admired Donald Trump, who in his own recent State of the Union address decided to provoke Democrats, dragging them to his preferred battleground.

Milei’s speech last Sunday occurred a day after a war broke out in the Middle East, but Argentina’s President barely said a thing about it. He’s not alone, in many discussions of the 'círculo rojo' business establishment, the conversation was about Milei’s bad manners and a stagnant economy, not global unrest. Points for the President, who regained political centrality, as a large portion of the population has already decided to give him another chance to jumpstart the economy. The idea within the círculo rojo is that Milei has the firepower to avoid any type of run on the currency, but has no tools to jumpstart a virtuous economic cycle outside of extractivist sectors.  That’s in great part why he’s jetting to the United States once again to participate in Argentina Week, a national roadshow aimed at raising investments for the country. It won’t be easy with Trump at war with the world. Markets are timorous, and the focus is on survival, not on risky investments in serial defaulter Argentina.

The war in the Middle East has definitely put the world on edge, even if Argentines pretend it won’t really have a domestic impact. Trump and Israel’s Benjamin ‘Bibi’ Netanyahu are emboldened after taking out a sitting world leader. Khamenei was a brutal dictator, probably many times worse than Maduro, yet it is troubling that the United States continues to make unilateral moves with global implications while the rest of the world just watches.

The view of the war has fluctuated substantially since it began, initially appearing as another act of tactical genius by taking out the secretive Khamenei in the first day of operations, à la Venezuela’s Nicolas Maduro. Then, the sentiment shifted, with talk of strategic improvisation from the United States given Iran’s preference for a protracted conflict (and use of inexpensive drones vis-à-vis the United States and Israel’s hugely expensive armaments). The situation is now in flux. Trump indicated the operation could last for some four to five weeks, while Iran analysts indicate the regime’s inherently resilient structure has prepared for an asymmetric war that leverages the use of Shahed drones and other Iranian technology to seed chaos and raise the political and economic price of its opponents. Counterintuitively, while the US and Israel have the technological edge and a massive advantage militarily, the costs of maintaining the war effort going beyond the projected window are substantially higher than for Iran, which even after decapitation seems prepared to keep going. But things are just getting started.

Global markets have responded, particularly energy markets in the face of a de facto closing of the Strait of Hormuz that hits directly at global gasoline prices, particularly in the US, Europe, and Asia. At the same time, the typical “flight to quality” market reaction draws investors out of risky assets and into safe havens. These are contradictory forces for Argentina, giving it an energy windfall due to exports from Vaca Muerta, but raising financing costs at a moment in which the country is looking to tap international debt markets.

The war will add noise to the global economy and geopolitics. While Argentina – supposedly one of the best countries to live in if World War III erupts – remains relatively aloof. The reverberations will hit at home, whether Milei and the local intelligentsia pay heed or not. At the same time, Milei has pledged total alignment with Trump’s US on foreign policy, while Iran has noted that all Israeli embassies are potential targets, which should raise alarms given the bombings of the early 1990s. 

Still, Milei’s major preoccupations are elsewhere. Regain political centrality and aim for re-election. Simple.